While the economy is slowly recovering, a recent analysis by Hewitt Associates, a global human resources consulting and outsourcing company, shows employee engagement and morale in the workplace are not. Almost half of organizations around the world saw a significant drop in employee engagement levels at the end of the June 2010 quarter -- the largest decline Hewitt has observed since it began conducting employee engagement research 15 years ago. This highlights the growing tension between employers -- many of which are struggling to stabilize their financial situation -- and employees, who are showing fatigue in response to a lengthy period of stress, uncertainty and confusion brought about by the recession and their company's actions.
Historically, Hewitt's research shows that about half of organizations improved their engagement levels in a one-or-two year period, while only 15 percent had experienced a decline. However, the past two years have been more challenging: the percent of organizations with declining engagement has been steadily growing. This trend is particularly notable in 2010. Hewitt's research shows that 46 percent of organizations experienced a decline in engagement levels in the quarter ending June 2010, while just 30 percent saw an improvement.
Hewitt's analysis suggests a clear link between employee engagement levels and financial performance. Organizations with high levels of engagement (where 65 percent or more of employees are engaged) outperformed the total stock market index even in volatile economic conditions. During 2009, total shareholder return for these companies was 19 percent higher than the average total shareholder return. Conversely, companies with low engagement (where less than 40 percent of employees are engaged) had a total shareholder return that was 44 percent lower than the average.
In its work with organizations around the world, Hewitt has uncovered key factors that differentiate organizations that improve their engagement from those that are not. According to Hewitt, companies with improved engagement levels:
-- Focus on the long term: While many of these organizations did cost-cutting and reductions in staff, they made changes consistent with their principles and values and without losing sight of their overall goals.
-- Obtain buy-in from leadership: Engagement is a top priority for leaders at companies that saw improved engagement scores. Leaders at these organizations were visible and provided ongoing updates to reduce employee uncertainty and stress. They also created excitement among employees about the future of the organization (82 percent compared to 51 percent at other companies).
-- Implement measurable actions: Successful organizations use employee information as a call to action rather than an assessment. They define specific and measurable actions and take steps in areas where the organization will see a clear impact.
-- Involve all stakeholders: Organizations with improved engagement understand that creating a "high engagement" environment requires the involvement of multiple stakeholders -- the organization (leadership, policies and program), managers and employees. They communicate to these stakeholders to ensure everyone is clear on their role in the process and on the employment proposition.
-- Understand key employee segments: Successful organizations understand that not all employees are necessarily equal. They focus on key segments and critical talent so that they're able to engage or re-engage them once the job market improves.
-- Utilize a broader array of information and analytics: Hewitt's analysis shows that 34 percent of organizations help employees through the on-boarding process to minimize the dip in engagement most organizations see in the first year of employment. Additionally, almost three quarters conduct exit surveys to understand why employees are leaving and proactively identify potential hot spots.
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